Thread for Rubicon Minerals.
Rubicon Minerals is about to release a PEA for their Phoenix project which is in Red Lake Canada and is adjacent to Goldcorp. Many expect a new resource estimate as well. The last resource estimate included data only up through July 2010. There have been over 30% additional meters of drilling results since then. There has also been bulk sampling since then.
The market seems to be waiting for the PEA and/or financing clarity. The dots are;
lots more drilling results coming in a new resource estimate
nugget effect in the drilling may have understated grade (research the papers of Simon Dominy)
bulk sample may better estimate grade
yes they will need some more money, but it's a high grade deposit and a lot of infrastructure is already in place
a recent presentation
Some believe that bulk sampling will likely show higher grade than the drilling data due to the "nugget effect". I am not the person to explain that well, but suffice it to say that if the gold is akin to clumpy, then a drill bit is too narrow to get an accurate read on the grade. Bulk sampling may be more scientifically accurate and show a different grade. There is a basis for this in the Red Lake camp as well as apparently specifically at the Phoenix site (McFinley Mine) from pre-Rubicon days as demonstrated above in the May 2002 technical report by G.M. Hogg and Assoc. that discusses drilling and sampling data from 1986- 1989. Bulk sampling seems to show a higher grade in that report.
(Page #8 on the report)
The last estimate for the MP Property with which the writer has some familiarity was completed by the mine staff in 1986. It was developed using underground sampling results augmented with closely spaced drill hole data where openings for sampling were not available. Standard methods of resource block development were employed to a depth of 400 feet, and an in-place grade calculated on the basis of sampling information. The estimate was as follows:
Total Estimated Undiluted Resource 334,007 tons at grade 0.20 (oz. Au/ton)
(Page 9 on the report)
I'm a big fan of this stock. It's the closest you're going to get to a sure thing in a one trick pony explorer.
this is a very good synopsis of Rubicon's current situation from seeking alpha.
The F2 bulk sample results, which are expected to be part of an end of June 2011 PEA, will provide solid evidence of the F2 deposit grade from the core area and from an edge area. Given the extreme difficulty of sampling a coarse gold deposit with just drill results, I believe that the bulk sample grades from F2 will be in line with the geological exploration potential grades provided by Peter George, a person with extensive experience in coarse gold deposit in general and Red Lake specifically. That is, I am expecting the bulk sample grades to be in the 21.2 to 29.2 g/t range.
good explanation of coarse gold deposits (nugget effect)in there as well.
all the miners are taking a beating. Investors are risk averse and physical metal is viewed as a safe haven while miners are high risk. DYODD and don't take big risks you can't handle.
Rubicon has taken a pounding since the spike of the first resource estimate in November.
It had a dark cloud resolved March 31 by issuing an updated 43-101, which by utilizing additional methods of calculations, displays very similar results to the November estimate.
The stock was free to rise on March 31 for about 7 trading days before the PM equities refused to continue higher with the PM commodities during the bulk of April. Then the PM commodities were hit and the stocks continued down.
Most know that news is coming for this company. They just can't figure out if the PM equities sandbox is safe at this point while the general markets aren't defying gravity.
This period in PM equities to me feels like smart money distributed in April, and has been accumulating more recently.
Do you think it is getting shorted into oblivion?
No. I do not think that.
I do wonder if an entity saw the November resource estimate and played hardball to get more shares. With the news in the pipeline, I would expect folks to be long now, even with the PM stocks slide of the last two months. Just an opinion.
I think that Rubicon may have good news to tell about their grade soon due to the bulk sampling results which may more accurately define the coarse gold nature of the deposit. I believe this deposit will eventually over years show itself to be 15-20 million oz, but in the here and now, people are obviously waiting to read the upcoming PEA in order to see if a mine might be profitable. In the meantime, we wonder when the market will get it and take the market cap into a different level.
Perhaps in these next few weeks the management will share enough information and answer enough questions to alter investor's appetite for the stock .
Anyone in the loop yet?
The news release shows clearly that the deposit is very economical. Even with the conservative interpretation of grade, they project 180,000 ounce per year at a cost per oz of $519. In my opinion they will easily outperform these conservative and preliminary numbers.
IMHO, here's what moved the pre-market this morning and some perspective. Excerpts from the news release.
"Average Mined Gold Grade 13.87 g/t"
"AMC decided to take a conservative mine planning approach in applying the average diluted resource grade to the bottom five mining horizons (bottom 305 metres of the resource) rather than use the modelled average grade of 33.8 g/t, thus reducing the total ounces on these levels."
(my comment: Then you have to look at where the samples were taken and the drilling results of the entire deposit as well as drilling results near those areas.)
I think the pre-market was way overdone and after management has had sufficient time to speak with investors, people will focus on how economical this report shows the deposit is.
Management is pleased to announced their economic assessment and the stock drops a $1.00. One of the analysis houses puts a sell on the stock. I did not think the numbers looked that bad at $1,500.00 gold. What am I missing?
The way I read it:
1) The firm who prepared the report (AMC) was extra conservative because they don't want the BCSC on their backs, like they were with the independent geologist P. George who prepared the January resource estimate first mentioned in press release at the end of November.
2) The bulk samples basically affirm that the delineation drilling modeling was a good predictor of grade. "it successfully confirms that the capped, diluted delineation drilling weighted average grade in this area is a reasonable determinant of recovered grade."
3) The bulk samples were taken from areas with lower grade drilling results. They were extracted "from the top of the F2 Core Zone" and "to the west from the WLB2 zone". Investors today may have mistakenly made a comparison with the higher grades from the heart of the F2 zone and were disappointed. That is not a valid comparison IMO.
4) AMC applied lower grades from the upper portions of the deposit to the lower areas. "It should be noted that, in determining the mining inventory, AMC decided to take a conservative mine planning approach in applying the average diluted resource grade to the bottom five mining horizons (bottom 305 metres of the resource) rather than use the modelled average grade of 33.8 g/t, thus reducing the total ounces on these levels.
5a.) There are more delineation results since February to add to to the model.
5b.) It seems that the bulk sampling indicates that the grades from the delineation drilling resource model are reasonable.
5c.) When delineation results from higher grade areas are modeled after this point in time with this PEA, one would expect the minable ounce count to increase, and the costs per ton to decrease, yielding greater profits.
Today was nuts. Just some opinions.
Author claims to have been at shareholders meeting. I don't know the author.
more notes from the Annual Meeting-
I bought the December 2011 - $2.50 calls today for $1.20. I have to believe with the price of gold rising, 6 months for the company to announce some good news and Gold Corp sitting in the wings, this has to be a good wager. Time will tell.
RBY up big after hours on $70m investment by AEM. Interesting....
Grabbed some Rubicon on a stink bid today. Now that AEM is in, I think it's safe.
Rubicon has been interesting the last few days as of today August 9. Stronger than a lot of others.
I think that the market got RBY wrong in late June as I noted above. AEM's investment in July confirmed my thoughts, but then the markets took a bath.
RBY IMO is undervalued within the sector AND that sector appears to be moving up through a big round number today (HUI 600). On the fundamentals side, permits and drilling news should be in at any point now. I do expect the biggies want to cut a deal, but they might not get a piece of it so easily. It has a very large land package with other neglected discoveries in the same camp. Way down the road, the whole enchilada might become a large producer without additional land. IMO the CEO wants the whole enchilada and it confounds the market.
Bigtime value investors with mining expertise like AEM just bought a chunk last month. That took a lot of risk away for me. When I look at the weekly chart, I wonder if the last 2 years will become a foundation for a huge longterm upswing. To me it looks like someone capped it around 6 last winter. I think they did, but whatever, here we are. If the last two years at some point serve as a launching pad, I expect a good view.
Just my opinions.